Auction scheduled today for Family Pharmacy assets

The bankruptcy proceedings for Family Pharmacy Inc. are nearing an end with an auction of the company’s assets scheduled today, followed next week with a hearing to confirm the new owner.

Jim MacLaughlin, the chief restructuring officer hired in the Ozark-based independent pharmacy’s bankruptcy case, said a dozen bids were received for Family Pharmacy, which filed April 30 for Chapter 11 bankruptcy protection. MacLaughlin, co-owner of Kansas City-based advisement firm Lloyd & MacLaughlin LLC, said the bids have been evaluated in advance of today’s auction in Kansas City.

“We have a number of qualified bidders,” he said, declining to say how many or identify them. “We don’t really know what will happen.”

MacLaughlin in early May identified an intended buyer, Smith Drug Co., a division of South Carolina-based J.M. Smith Corp., according to past Springfield Business Journal reporting. Smith Drug Co. is Family Pharmacy’s primary wholesale pharmaceutical distributor and the largest creditor in the bankruptcy reorganization case.

A court document filed June 7 notes Family Pharmacy’s intention to sell substantially all of its assets to J.M. Smith Corp. affiliate Smith Management Services LLC for $8 million, plus assumption of certain liabilities, including debtor-in-possession facility obligations, up to $2 million, and assumption of additional liabilities related to contracts and leases.

The asset sale is subject to higher and better offers, according to the court document, noting if any qualifying bids are received, the debtors will hold an auction and sell to the highest bidder. A hearing to consider the proposed sale is scheduled Aug. 7 in Kansas City, which will determine the best bidder and a backup bidder, MacLaughlin said.

Family Pharmacy, which has 20 retail pharmacies and two long-term care pharmacies, cited two years of net losses totaling $7.5 million, according to court documents. The company posted net losses of $3.5 million in 2017 and $4 million in 2016, following profits of $686,000 in 2015. In 2017, gross revenue dropped to $60.3 million from $66.8 million in 2016 and $68.3 million in 2015.